Insurance Bad Faith Lawyer: What to Do When Your Claim Is Denied

Insurance is often seen as a safety net, a financial buffer that can help individuals and businesses navigate unexpected challenges and catastrophes. Whether it’s health, auto, home, or business insurance, the expectation is that when a claim is made, the insurance company will act in good faith and provide the necessary support. However, this is not always the case. Sometimes, insurance companies deny claims unjustly or fail to meet their obligations under the policy. When this happens, policyholders may need to seek the help of an insurance bad faith lawyer. This article explores what insurance bad faith is, what to do when a claim is denied, and how an insurance bad faith lawyer can assist.

Understanding Insurance Bad Faith

Definition and Legal Basis

Insurance bad faith refers to an insurer’s attempt to renege on its obligations to its clients, either by refusing to pay a legitimate claim, offering an unreasonably low settlement, or delaying the payment of a claim without a valid reason. The concept of bad faith in insurance law stems from the implied covenant of good faith and fair dealing that is inherent in all contracts, including insurance policies. This covenant means that both parties—the insurer and the insured—are expected to act honestly and fairly towards each other.

Types of Bad Faith

Bad faith actions by insurance companies can manifest in various ways:

  1. Unjust Claim Denials: Denying a claim without a reasonable basis or failing to conduct a proper investigation before denial.
  2. Delays in Processing: Unnecessarily delaying the processing of a claim to avoid payment.
  3. Lowball Settlements: Offering significantly less than what the claim is worth.
  4. Failure to Communicate: Ignoring or inadequately responding to policyholders’ inquiries and concerns.
  5. Misrepresentation: Providing false information about the policy coverage or the claim process.

Legal Recourse for Bad Faith

When an insurance company acts in bad faith, policyholders have the right to take legal action. This can include filing a complaint with the state insurance commissioner, seeking arbitration or mediation, or filing a lawsuit for breach of contract and bad faith. The remedies available can include compensatory damages for the original claim amount, punitive damages, attorney’s fees, and other costs associated with the bad faith action.

What to Do When Your Claim Is Denied

Review the Denial Letter

The first step after receiving a denial is to carefully review the denial letter from the insurance company. This letter should outline the reasons for the denial. Understanding these reasons is crucial because it will help determine whether the denial is legitimate or if there is a basis for a bad faith claim.

Gather Documentation

Collect all relevant documentation related to your claim. This includes:

  • The insurance policy itself.
  • All correspondence with the insurance company.
  • Proof of loss or damage (e.g., photos, repair estimates, medical bills).
  • Any notes or records of phone calls or in-person meetings with insurance representatives.

Having comprehensive documentation will strengthen your case and provide evidence of your claim’s validity.

Request a Detailed Explanation

If the denial letter does not provide a detailed explanation, request one from your insurer. Ask for specific reasons why the claim was denied and the policy provisions they relied upon for the denial. Insurance companies are required to provide this information, and it can give you insight into whether the denial was justified or if there are grounds for a bad faith claim.

Appeal the Decision

Many insurance policies include a process for appealing a denial. Follow the appeal procedures outlined in your policy. This often involves submitting additional information or documentation to support your claim. During the appeal process, continue to communicate with the insurance company and keep records of all interactions.

Seek Professional Assistance

If your appeal is denied or you believe the insurance company is acting in bad faith, it may be time to seek professional assistance. An insurance bad faith lawyer can evaluate your case, advise you on the best course of action, and represent you in negotiations or litigation against the insurer.

The Role of an Insurance Bad Faith Lawyer

Initial Consultation

During the initial consultation, the lawyer will review your case, including the denial letter, your insurance policy, and all relevant documentation. They will assess whether there is evidence of bad faith and discuss your legal options. This consultation is also an opportunity for you to ask questions and understand the lawyer’s approach and fees.


If you decide to proceed, the lawyer will conduct a thorough investigation. This may involve:

  • Reviewing the insurance company’s handling of your claim.
  • Analyzing the policy language and the reasons provided for the denial.
  • Gathering additional evidence, such as expert opinions, witness statements, and documentation from third parties.


Often, an insurance bad faith lawyer can negotiate a settlement with the insurance company without going to court. They will use their knowledge of insurance law and their experience with similar cases to advocate for a fair resolution. This can involve demanding the full amount of the original claim, as well as compensation for any additional damages caused by the bad faith actions.


If a settlement cannot be reached, the lawyer will prepare to take your case to court. This involves filing a lawsuit, conducting discovery (the process of gathering and exchanging information between parties), and representing you at trial. During litigation, the lawyer will present evidence of the insurer’s bad faith and argue for compensatory and punitive damages.

Case Studies: Real-Life Examples of Insurance Bad Faith

Example 1: Denied Homeowners Insurance Claim

John, a homeowner, experienced significant water damage to his home due to a burst pipe. Despite having a comprehensive homeowners insurance policy, his claim was denied on the grounds that the damage was due to “wear and tear,” which was not covered by his policy. John believed the denial was unjustified and sought the help of an insurance bad faith lawyer. The lawyer reviewed the policy, gathered evidence from contractors and plumbing experts, and negotiated with the insurance company. Eventually, the insurer agreed to pay the full claim amount, as well as additional damages for the delay and stress caused by their initial denial.

Example 2: Delayed Auto Insurance Payment

Sarah was in a car accident and filed a claim with her auto insurance company for the repair costs. Despite submitting all required documentation and following up multiple times, the insurance company delayed payment for over six months. Frustrated by the delays and mounting repair costs, Sarah consulted an insurance bad faith lawyer. The lawyer discovered that the insurance company had a pattern of delaying claims to pressure policyholders into accepting lower settlements. After filing a lawsuit, the insurance company quickly settled, paying not only the full claim amount but also additional damages and attorney’s fees.

Example 3: Health Insurance Denial

Tom needed a specific medical treatment that was recommended by his doctor, but his health insurance company denied the claim, stating that the treatment was not “medically necessary.” Tom’s insurance bad faith lawyer obtained medical expert opinions that supported the necessity of the treatment. The lawyer also found internal documents showing the insurer’s strategy to deny certain high-cost treatments. Faced with this evidence, the insurance company settled the claim and paid for the treatment, as well as additional damages for their bad faith actions.

Preventing Bad Faith Issues

Understanding Your Policy

One of the best ways to prevent bad faith issues is to thoroughly understand your insurance policy. Know what is covered, what is excluded, and the procedures for filing a claim. Ask your insurance agent or broker for clarification if anything is unclear.

Keeping Detailed Records

Maintain detailed records of all interactions with your insurance company. This includes keeping copies of all correspondence, documenting phone calls, and saving receipts and other evidence related to your claim.

Acting Promptly

File claims as soon as possible after an incident and respond promptly to any requests for information from your insurer. Timely action can prevent delays and show that you are fulfilling your obligations under the policy.

Seeking Professional Advice

If you have questions or concerns about your insurance policy or a claim, seek advice from a professional, such as an insurance agent, attorney, or a consumer advocacy group. They can provide guidance and help you avoid potential issues.


Dealing with an insurance claim denial can be a stressful and frustrating experience. However, understanding your rights and knowing what steps to take can make a significant difference. If you believe your insurer is acting in bad faith, consulting an insurance bad faith lawyer can provide the expertise and support needed to pursue a fair resolution. By taking proactive measures and seeking professional assistance when necessary, you can protect yourself and ensure that your insurance company fulfills its obligations.

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